Find three errors: 1) There is a computer, and yet there is a physical bookshelf. 2) There is a computer, and yet there is a physical chess board. 3) The computer is big and clumsy, instead of just a small tablet you can bring with you everywhere.
It is a matter of great concern to economists, and lately to politicians and society at large, when economic growth slows down. But this may be misguided. Sometimes slower economic growth is a GOOD thing. Let me explain.
If you look at the world economy in 2011, you will notice that growth is rapid in developing countries that are not in a state of war or civil war. It is much lower in mature economies, such as those of western Europe and north America. This is as it should be. People in India and China urgently need new shoes and roads to use them on. These things are easily measured in currency. If the shoes become cheaper, people buy new ones when their kids grow out of them instead of waiting until it hurts. As they become richer, they add more meat to the rice. Eventually they can afford a bike and later a car. All this is easy to measure with the tools of traditional economy, for it was developed under similar circumstances in the West.
But when we switch from buying physical books to e-books, the price eventually comes down (although it took its sweet time, and I’m looking at you Amazon and B&N!). You don’t need to chop down trees, drive lorries with wood to the pulp factory, drive lorries with paper (and occasionally one with ink) to the printing presses, drive lorries with printed books to the warehouses, drive lorries with the same books to the book stores, and have helpful clerks hovering over the gullible-looking customers. Gradually these savings trickle down to the customers. This is economic anti-growth.
Think about it. Up to a point, books are like children’s shoes in a developing country: You wish you could afford more of them. But for most Americans and Europeans today, the number of books is determined by how much time you want to spend reading books. (I suspect this to be even truer when you don’t have a visible bookshelf that other people can see.) There are certainly exceptions to this, and you are one of them: If you did not like long texts, you would not read this right now. But there are still hundreds of millions of people who are Not Like You.
And because of this, we no longer pay to employ the lumberjacks and truck drivers and the guys at the printing press. And, to great lament among fellow book lovers, even the bookstore clerks. Light knows how long even the librarians will have a job to go to. But the thing is, this does not mean people buy fewer books. People buy MORE books, although it is probably just us bibliophiles who make up almost all of that.
The gradual withering of the printed book business contributes negatively to economic growth in the official statistic. That is to say, if there is some growth in other parts of the economy, the sum might still be zero because of this. And because the same thing happens to newspapers. And because the same thing happens to CDs. And DVDs. And banks. And…
Do you see it from this angle now? Do you know what I mean? Sometimes economic anti-growth is a good thing. You get the same thing, or pretty much the same thing, without the middlemen. There is no need to spend that much money and employ that many people.
But the people who lose their jobs! It isn’t their fault! What about them? Well, I suppose we could levy a tax on e-books and use it to employ people to cut down threes, drive them to the factory, drive the paper to the printing press and print book, then drive them to large storage halls in the Nevada desert and store them there until the Internet age ends. Or we could ship them off to the moon where there is no pesky humidity and they remain pristine for a hundred million years, so that future visitors from around the galaxy can see that once, we read books.
Most people are probably not going to pay for this voluntarily, though. They tend to find other ways to spend the money they save on books, or newspapers, or movies. The balance between finding new needs and filling the old needs more cheaply is what determines growth in a mature society. This process of rapid change means some people just can’t hang on. Most lumberjacks can’t get a job at Amazon, and quite possibly not in whatever else people now find to spend their money on.
So we have a growing part of the populace who are not employed. That is to say, they don’t have the skills or the means to do something that makes other people happy. If you find something to do that makes people happier, those people are probably willing to pay you. For instance, people here in Scandinavia and increasingly also in the USA are willing to pay for streaming music that they could have stolen for free on Pirate Bay
The rapid economic growth in the western world after World War 2 was to a large degree caused by women redefining the borders of work. In the past, housewives cooked, cleaned, looked after the sick and elderly, and raised children. They did all this for “freeâ€, or rather for a portion of the husband’s income, mostly without formal transfer of payment. Today women are usually employed outside the home, and those who look after children usually look after other people’s children for a modest pay. The elderly live in institutions, as do the chronically ill. Food is often prepared completely or partially outside the home, and again money is changing hands formally, making it seem like there is more economic activity than it was when the wives did it. But this process has stopped. There is no more pseudo-growth to get out of this, well unless prostitution becomes commonly accepted and part of the ordinary labor force. Then we can do away with families entirely. I am not recommending it, but it would increase “economic growth†in official statistics.
My point is that “economic growth†is not always a measure of something good, and its opposite is not always a sign that something is horribly wrong. The question is how we can deal with this change in the mature economies. Should we send the lumberjacks back to the kitchen, to raise their children and look after their frail mother-in-law while the wife is out earning money as an economist? Or should we, as in northern Europe, offer generous disability pensions to people who are unable to adapt to the changing employment? Or should we, as it seems some Americans favor, “just let them die� I think what we choose in this regard will define us as a civilization, and our decisions are also based on the kind of culture we already have.
But what we cannot do any longer is grow our way out of all hard choices. We have faked it for a while with bubble economy, selling stocks or houses to each other for every higher price, but this is just mock-up and make-believe. We have to make our choices or face the consequences: For to decide not to make a choice is also a choice, and rarely the best one.
